July 17, 2020 – Hope it was a great week Centizens! Here are some tidbits to chew over the weekend.
Highlights for the Week
Dangerous Waters Ahead: The TikTok saga has only grown tenser in the past week. To recap, the app got kicked out of India because of a border skirmish, pulled out of Hong Kong and found itself in the crosshairs of the Trump administration due to national security concerns. Over the weekend, White House adviser Peter Navarro said he expected President Trump to take “strong action” against TikTok, and fellow Chinese app WeChat. Later in the week, we learned the timeline for something to happen was closer to “weeks” than months. A report from the Financial Times painted a picture of what that might be – the White House is contemplating blocking U.S. companies from providing technology to the short-form video app, a move “throttling the ability” of TikTok to operate in one of its most important markets. As to how TikTok might handle the onslaught of sanctions, Reuters reported another White House adviser says the app might separate from ByteDance and become a U.S.-based company.
The Good, The Bad and The Healthy: The U.S. reached a startling milestone Thursday, crossing 70,000 new Covid-19 infections per day for the first time. Considering the country’s cases were only approaching 40,000 per day a little over a month ago, it seems almost certain we’re going to hit Dr. Fauci’s warning of a 100,000 daily cases. It’s tough news, but on the opposite end, there’s optimism on the vaccine front. Moderna announced its vaccine had generated the desired immune response in all 45 subjects in its latest study. The company is now gearing up to launch a 30,000-person test case starting at the end of July. A couple of days after the Moderna news, Oxford announced early trials of its vaccine candidate developed a “double protection” response. It’s too early to deem either vaccine successful and the pandemic on its way to being solved, but both offer promising steps.
Hacked and Attacked: The FBI opened up a probe into what’s being called the “most significant” hack in Twitter’s history. The attack compromised around 130 accounts, including those of Elon Musk, Barack Obama, Kanye West, Joe Biden and Apple Inc, with the perpetrators posting “bogus messages requesting money be sent to cryptocurrency accounts” and potentially stealing private direct message information. It’s a disastrous turn of events for a tech company that doesn’t exactly have a hack-free history. Twitter has dealt with its internal turmoil as CEO Jack Dorsey faces increasing pressure to boost revenues and had even to avert his own canning.
An interesting aside is whether this gives any further validation to the European Union’s top court striking down the widely used Privacy Shield data transfer framework between the EU and U.S. Privacy activists have long argued the U.S.’s surveillance practices “should make it ineligible to store European data.” This isn’t a surveillance issue, but Twitter was one of the more than 5,000 companies using the Privacy Shield framework.
Institutional Research Roundup
The jury is still out on what the best economic approaches were to deal with the virus. Germany locked down early and reopened quickly. Sweden didn’t lock down as hard and didn’t have as steep an economic drop but took longer in recovery. The U.S. has wound up somewhere in between. The U.K.’s path “combines the worst of both worlds” – even with lockdown, the virus still spread across the country. Also, the high death toll made it politically unviable to ease restrictions until recently. The U.K. has suffered the highest death tool per population of all developed nations, minus Belgium, and is the most shut-down G10 economy.
In a survey of 1,200 responses, 91 percent said Tesla is overvalued. Six percent said no, and three percent don’t know.
Joe Biden’s Clean Energy Plan has several components and proposes a $2 trillion accelerated investment in “infrastructure, electric vehicles, transit, renewable energy, efficient buildings, housing, agriculture/conservation and environmental justice.” There are seven key elements:
- Build a modern infrastructure
- Position the U.S. auto industry to win the 21st Century with technology invented in America
- Achieve a carbon pollution-free power sector by 2035
- Make dramatic investments in energy efficiency in buildings, including completing 4 million retrofits and building 1.5 million new affordable homes
- Pursue a historic investment in clean energy innovation
- Advance sustainable agriculture and conservation
- Secure environmental justice and equitable economy opportunity
Covid-19 Impact Tracker
- Covid-19 cases in earlier hotspots continue to decrease. But rising infection rates in places such as Florida, California, Texas, Arizona and much of the South continue to bend the curve upwards. A spike in mortality rates indicates this isn’t just a factor of increased testing. Estimates show 50 to 80 percent of GDP come from countries with worsening virus trends, signaling the continued presence of significant downside risk.
- Seasonal factors prompted some improvement in adjusted claims. NSA initial claims for the week of July 11th increased by around 109,000, and NSA continuing claims for the week of July 4th increased by 838,000. The most substantial portion of the pickup came from recent Covid-19 hotspot states – Florida, Georgia and California. This shows the recent leveling off in some of the high-frequency data on mobility, small business activity and restaurant seatings in response to virus flare-ups are beginning to impact the labor market.
- High-frequency data on balance improved this week. The predicted year-over-year GDP growth rate rose by about 70bps. Recent data are about roughly 10.5 standard deviations worse than average and consistent with an approximately 9 percent year-over-year contraction in GDP.
- Aggregate economic activity measures have improved, but data on mobility, small business activity, and restaurant seatings are leveling off, particularly in states with faster case growth. The recent surge in cases poses a risk to the health of the recovery as consumers and businesses are beginning to scale back their behavior. Until the virus is under control or there is a widespread vaccine, households and businesses will not be comfortable returning to “normal” economic activity levels. More needs to be done to maintain recovery as far as public health and economic assistance.
Thanks for reading!
— Justin Birnbaum